Actually, (in FontLab) typing anyting outside the Latin-1 character set will not work - you will have to use the unicode values and/or the glyph names. Just mark the glyphs in the font window and then open the kerning window and you will see how the text needs to be formatted...

Could be two separate issues:
1) When you preview text in the kerning panel in FontLab you have to have the font window as Unicode (not Codepages or Names) - otherwise the text you type in the string field will be all goobledegook...
2) I think including the codepages in the info/header will solve the Windows/Microsoft/WordPad issue...

@vinz: I'm not saying there are no quality free fonts.
I'm just saying that they will probably be so much used that they will not give that "exclusive" feeling. Not too "ultra expensive high end" when your design looks similar to thousands of teenage girls blogs because they are based on the same free fonts...

Using a free font (for such a commercial project) will probably not help your brand look expensive. Anyone recognizing you using the cheapest possible solution will not be impressed
As koeiekat suggested: you should probably go for a geometric sans - I'd also suggest a light weight and plenty of extra spacing

If you have $10 to spare you could also get the Pro version - this has correctly set Ascenders/Descenders AND swirls on ALL uppercase letters http://www.cheapprofonts.com/Inked_God_Pro
(Gyom Séguin receives royalties from all sales)

Kimberly Geswein has updated many of her handwriting fonts recently to include those diacritics. The diacritic letters are not always very well designed, but perhaps passable for your intended use? Only free for personal use, mind you.http://www.dafont.com/kimberly-geswein.d1468

I specialize in upgrading free fonts to include most diacritics (with permission from the original designers) and then releasing them with a very generous commercial license. Check out my site if you're on a tight budget, and need good quality fonts with multilingual support http://www.cheapprofonts.com/

BTW, UTF-8 is not a font character set, it's a method to select glyphs (based on Unicode)
ALL the TrueType fonts on this site support UTF-8 - they just don't have that many diacritic glyphs...

To create such a font is very time-consuming - and difficult! It takes lots of alternative letters and advanced OpenType programming. So I don't think you will find a free font with that quality...
Sneaker is not that expensive. Buy it, save yourself a lot of searching, enjoy!
(Beware: to get it to connect automatically you will need to use software that can use advanced OpenType features - like Adobe CS...)

"LT" in a fontname is for Linotype. "Lt" might be short for Light. Is it a light font?
"Std" in a font from Linotype/Adobe/Monotype stands for "Standard OpenType font" - as in no extra language support.
"Pro" in a font from Linotype/Adobe/Monotype means it has extra language support (minimum CE, but often Cyrillic and Greek, too).
Both "Std" and "Pro" fonts from Linotype/Adobe/Monotype may contain advanced OpenType features, but they also may not – Std/Pro only tells something about the language support.
But we're miles away from dafont/"free font" territory here...

Glad to be able to help somewhat.
This software manufacturer then probably use a special format for their alphabets - perhaps they can help you by documenting how to make them?
But remember that this has nothing to do with fonts as such: the alphabets you use directly in this software would be more like a collection of CAD drawings of the letters packaged together in that softwares (unique?) proprietary format.
You can draw your own alphabets in the CAD program, of course – and copy/paste the letters from your own drawing.

What bilbo22 is looking for is a font where the letter shapes are made with a single line – a line that he can follow with his engraver tool and make different thicknesses by engraving deeper or use different engraver tips. Sort of a "centerline" font.

But this directly contradicts what a digital font IS: a font is per definition made by filled contours. No filled outlines, no font. A font without closed lines is a defective font.

So bilbo22: NO, NONE of the fonts on this site (or any other font site) works exactly like you want them to. You need to contact the manufacturer of your engraving machine for their selection of proprietary alphabets – or get their help to create alphabets of your own.
In a pinch you could of course use extremely thin fonts (where the distance between the "outside" and "inside" curve is minimal), but your engraver tip would still need to follow every curve of the letter twice (one time for each "side" of the outline).